Business Directories

Egypt bank closures cut off vital Gulf remittances

Dubai, February 1, 2011

The closure of Egyptian banks has prevented Gulf-based Egyptians, who make up the bulk of the population living abroad, from sending vital remittances back to the country, exchange operators said on Tuesday.

Egypt, racked by political unrest as demonstrators bid to end President Hosni Mubarak's 30-year rule, is heavily reliant on funds from its citizens abroad. The World Bank estimates about $7.6 billion was remitted to Egypt in 2010.

But most money transfer firms conduct business through Egyptian banks, leaving recipients empty-handed after the central bank ordered lenders to close on Sunday.

Banks will remain shut on Wednesday and the central bank said it is still assessing whether they will shut again on Thursday.

'We couldn't make a single transfer to Egypt,' said Mohammed al-Ansari, chairman and managing director of the UAE's Al Ansari Exchange in Abu Dhabi.

'On Sunday, we got a lot of interest but we cannot do anything for now.

'Usually we have big volumes at the first of the month, when salaries are paid.'

Al Ansari, who said Egypt accounts for about 4 to 5 per cent of volumes at his firm, said he expected customers to switch to US dollars from Egyptian pounds once banks reopened. The Egyptian currency has hit six-year lows amid the unrest.

'As soon as it will open, we expect big volumes, mostly for family needs, not even for investments,' he said.

'Seventy-five per cent of transfers were in Egyptian pounds because it was a stable currency. But we expect that to change now.'

Remittances from Egyptians abroad rose 39 per cent to $9.75 billion in the 2009-10 fiscal year, an Egyptian foreign affairs ministry official was quoted as saying last month.

Assistant Foreign Affairs Minister Mohamed Abdel Hakam said 70 per cent of the approximately 6 million Egyptians working abroad live in Gulf states although the lion's share of remittances came from US expatriates, who sent $2.2 billion last year.

Remittances from Kuwait came in second at $1.5 billion while Saudi-based Egyptians sent $1 billion.

'We haven't been sending money to Egypt for three days now,' said a customer service agent at Kuwait's Muzaini Exchange.

More than a million Egyptian expatriates are thought to live in the Gulf, the lion's share in Saudi Arabia, where they rely on the stronger but autocratic Gulf economies to send home remittances worth billions of dollars.

'It's impossible, everything here is stopped,' said Sayed, an employee at Al Fardan Exchange in Dubai which generates about 35 per cent of its business from Egyptian transfers.

'There are a lot of Egyptians in the Gulf and they can't send money.'-Reuters